On January 4 I started this blog. Today I will finish -- at least for now.

Most of what I have shared here was first written five or more years ago. I have revised and updated a bit, but only a bit.

In late 2004 when I wrote the first draft I was at the beginning of a tough time. In the last few months I have (I hope) emerged on the other side of the tough times.

There were several motivations for moving these meditations to a blog. These motivations did not include what has emerged as the principal personal benefit: Revisiting these meditations has helped me make better sense of the last five years.

The great challenge of these years has been finding a way to match my own sense-of-self (tsedeq) with the reality of my relationships (mishpat). I had a vague notion of this tension. Preparing these meditations helped clarify the tension and how it might be resolved.

As the struggle opened, my sense-of-self was suppressed, even oppressed, by a sense of obligation to clients and colleagues who mostly were not interested in the Exodus journey that I felt compelled to undertake. Most of these clients and colleagues were entirely satisfied with what struck me as Egyptian slavery. And the few colleagues who shared my dissatisfaction were inclined to choose a path considerably different than the twisting trek across the Sinai on which I had begun to walk.

While I have not - yet - reached what I envision as a promised land (flowing with milk and honey), I am confident that my current direction is much better suited for my particular tsedeq... and I am in the midst of working with a range of communities in shaping a meaningful mishpat.

There is a third set of meditations, finished nearly four years ago, that focuses on mishpat. But before I bring these to a blog, I want to work through the crafting of mishpat within my new context.

There were at least six individuals who have been regularly looking in on this blog and a few dozen who occasionally checked it out. Thanks for joining the journey. Wherever you are, I hope the path unfolding before you leads to an intersection of tsedeq and mishpat. I am still moving in what I hope is that direction. See you there.

The Fundamental Link

In reviewing the various components of strategic planning and execution, Peter Drucker comments, “But lacking divine guidance, management must make sure that these difficult responsibilities are not overlooked or neglected but taken care of as well as humanly possible.”

I am arguing that we have the benefit of divine guidance. For non-believers there is, at least, a persuasive pattern of past lessons learned.

In the work of Moses, in the story of the Exodus, and in the history of dozens of successful and failed enterprises we can perceive the fundamental role of balancing righteousness and justice. This is the fundamental link, the core theme, and the ultimate anchor for every effective strategy. This pattern consistently cultivated is the foundation of comparative advantage.

We share many characteristics and needs. We are all creative. We all use frameworks. We all seek to love and be loved. Any strategy or system that tries to deny these common values will fail. The more a strategy amplifies and links these values, the more likely it will succeed in the long-term. Justice is not just a nice goal. The linked activities that advance the goals of justice are fundamental to achieving sustainable comparative advantage.

We are each unique expressions of our shared identity. We will each be creative in different ways. A framework meaningful to one of us is likely to confuse another. We each embody different strengths and weaknesses. Any strategy or system that attempts to ignore or eliminate this differentiation will eventually fail. Righteousness is not just an old-fashioned religious value. The linked activities that encourage individuals to seek and become their true selves are fundamental to achieving long-term and sustainable comparative advantage.

Each enterprise will require strategies that build on the anchor of justice with righteousness. These core themes are the foundation of comparative advantage, not its completion. But any strategy without these at the core will fail.

It is also true that adopting justice and righteousness as the core of your strategic system will not guarantee short-term success. Strategy does not preordain the outcome of every tactical engagement. Tactics still matter. Persistent failure to make good choices and achieve operational effectiveness will undermine the best strategy. It is not possible to separate reality into convenient compartments. The strategist must engage the whole system.

This focus on righteousness and justice does, however, enhance the ability of the enterprise to recover from tactical failures and the short-comings of other strategic decisions.

To ever approach a community of true selves, each individual must accept responsibility for his or her own Exodus story. If each of us is a unique expression of God, finding our true self and learning how to express our true self is an awesome and, probably, life long task. In the journey of self-discovery too many of us give up or become complacent. The struggle is difficult. For most of us behaving in full concert with our true self is a momentary experience. It is exhilarating, but we tend to lose balance quickly.

A thousand years after the death of Moses, a descendent of Jacob – another God wrestler – translated the wisdom of his grandfather and its encouragement to seek out the balance of our true self:

… Do not be ashamed to be yourself.
For there is a shame that leads to sin,
and there is a shame that is glory and favor.
Do not show partiality, to your own harm,
or deference, to your downfall.
Do not refrain from speaking at the proper moment,
and do not hide your wisdom.
For wisdom becomes known through speech,
and education through the words of the tongue.
Never speak against the truth,
but be ashamed of your ignorance.
Do not be ashamed to confess your sins,
and do not try to stop the current of a river.
Do not subject yourself to a fool,
or show partiality to a ruler.
Fight to the death for truth,
and the Lord God will fight for you.

If we align our belief and behavior – and that of our enterprise – with truth, that position gives us a comparative advantage in surviving and thriving. Choosing to side with the ultimate reality of differentiation is key to that alignment. Becoming our true self and respecting the true self of others is the foundation of any meaningful achievement.

In the life and teaching of Moses we can see a demonstration of what Michael Porter and others have outlined as good corporate strategy. For Moses these teachings were designed to provide guidance for all of life.

Righteousness

Each day you should move closer to becoming your true self. You are unlikely to ever be your true self. But persisting in the struggle to become your true self is fundamental to any success, effectiveness, or hope of happiness.

Whenever you perceive tension between your “personal ethos” and “professional commitment” there is cause to pause. This is the tension at the heart of every Exodus experience. The tension may be caused by either your own selfishness or the community’s expectation that you sacrifice your true self. The tension is a great opportunity.

The search for our true self – tsedeq or righteousness – can too easily become an excuse for self-righteousness. This path leads to rejecting our shared identity with others. Rather than weaving a web of mutually supportive links, the self-righteous cut links and build barriers to linking. Righteousness cannot prevail unless it is tightly linked to justice, and justice is the outcome of differentiation linked together for mutual support.

The claims of community can sometimes be used in an attempt to deny your true self. In searching for justice the community may begin to focus more on the rules and rituals that reinforce what we share, rather than the inspiration that celebrates the rich differentiation that also sustains us. Justice is the outcome of a community of true selves, not the leveling of selves into sameness.

To help in achieving this difficult - even treacherous - balance of righteousness and justice recall what our latter-day Amos, Mihaly Csikszentmihalyi, has called entropy. Among the principal characteristics of entropy that he lists are, “disorder, confusion, waste of energy, the inability to do work and achieve goals… the dissolution of order into redundant randomness… violence, conflict.” When we perceive in ourselves or in our community – family, place-of-work, hometown, or nation – a tendency for entropy we should be ready for wrestling. These are the symptoms of bad choices, bad leadership, and a bad direction. They must be resisted.

Ideally the forces of entropy can be redirected. In the life of Moses we have seen how to apply principles and techniques for such redirection. But we have also seen in the Exodus story when persistent sources of entropy are cut off and left behind in order to move on toward the Promised Land and the achieving of ultimate purpose.

The most difficult decisions I make relate to terminating colleagues for cause and resigning difficult clients. In both cases I have to make a decision that the other has become a persistent source of disorder, confusion, waste of energy and more that threatens my own true self, the true self of my colleagues, and/or the true self of our enterprise. It is a dangerous judgment, but after wrestling with the tension and finding no other resolution, it can be a necessary choice. I have too often delayed the decision too long.

Moses transformed his own weakness and the weakness of his community by embracing creativity, empowerment and love. He did not interfere in the free choice of others. Moses offered helpful frameworks for making good choices and he demonstrated the need and opportunity for redemption. These are your wrestling “holds” and “moves.” These are the tools for finding your true self and creating a community of true selves.

Wrestling is a sport that can really only be learned on the mat and by wrestling. In most other sports there are a whole host of helpful modes of practice that can be engaged individually and outside a scrimmage. But wrestling requires wrestling. We learn primarily by engaging in the struggle. We may sometimes practice with friendly challengers – helpful colleagues and appreciative clients – but the only real test, and the only real way to seriously refine your skills, is in struggling with those who seek to defeat you. These moments of true tension are the most meaningful opportunities for applying principles, learning and confirming your commitment.

In wrestling you do not destroy – or purposefully hurt – the other. But you seek to apply your strengths to the weakness of the other, to refine your skills in application, and to sharpen your consciousness of strength and weakness, in both yourself and in others, and thereby to prevail, and then to wrestle again.

A commentator on the Torah once wrote,

We are here to do.
And through doing to learn;
And through learning to know;
And through knowing to experience wonder;
And through wonder to attain wisdom;
And through wisdom to find simplicity;
And through simplicity to give attention;
And through attention to see what needs to be done.

Execution of Strategy

Strategy is mostly about change and change is hard. Peter Drucker writes, “Management has no choice but to anticipate the future, to attempt to mold it, and to balance short-range and long-range goals. It is not given to mortals to do well any of these things.”

Later Drucker emphasizes that at the strategic level there “is a need for an organ of the enterprise which concerns itself with the gap – always a big one – between what the organization stands for and what it actually does. There is a need for an organ concerned with vision and values in the key areas. Again, this can only be an organ of the enterprise that sees and comprehends the entire business.”

We are mortals and there will always be a gap between what we seek to become and what we are today. But this need not be a proof of complacency or evidence of hypocrisy – if we are committed to a principled engagement with the challenges that face us.

The descendents of Jacob are more commonly called Israelites. Midway through his life Jacob assumed a new name. On the edge of disaster – again – he withdrew into the wilderness to struggle with reality. Overnight he wrestled with God. In the morning God gave Jacob a new name, “You shall no longer be called Jacob, but Israel, for you have striven with God and with humans and prevailed.” (Genesis 32:28) Israel means God wrestler.

The execution of strategy is a never-ending wrestling match. Jacob prevailed by not giving up. Jacob continued to encounter challenge after challenge. But he was committed to the struggle, committed to doing his best to transform his current condition into something closer to the ultimate reality envisioned.

Communicating the vision, forging the links, weaving the web of linkages, creating a culture that integrates belief and behavior, making the tough choices, and recovering from the bad choices – this is a life of challenge that requires a profound commitment.

Donald N. Sull, a Harvard Business School professor, writes, “Successful managers all excel in the making, honoring, and remaking of commitments. Managerial commitments take many forms, from capital investments to hiring decisions to public statements, but each commitment exerts both immediate and enduring influence on the company. Over time and in combination, a leader’s commitments shape a business’s identity, define its strengths, and weaknesses, establish its opportunities and limitations, and set its direction.”

Executing strategy is about transforming the enterprise. Sull argues that transformation is usually the result of three sequential and linked commitments: selecting an anchor, securing the anchor, and aligning the organization around the anchor. For me Sull’s anchor is very similar to Porter’s theme. Ikea’s anchor is the link between affordability and variety. Moses chose the link between righteousness and justice. Sull writes,

To overcome the forces of organizational inertia – not to mention the skepticism that greets any change management effort – managers need to aggressively promote the new anchor and take concrete actions to secure it… When it comes to securing and anchor, not just any action will work. Effective transforming commitments share three characteristics. First, they are clear. Simple and concrete messages can be passed through an organization with minimum distortion, while vague or complex ones end up being distorted beyond recognition. Second they are credible. Employees, customers, investors, and partners must believe that the manager is serious, about her commitments and will stick with them. Otherwise, a new anchor may be viewed as cheap talk that can safely be ignored. Finally, they are courageous. The new anchor and securing actions must make the status quo untenable; they can’t leave room for retreat… Once the anchor is set and secure, all of the organization’s other frames, processes, resources, relationships, and values must be reconfigured to support it… Commitments define individuals just as they do organizations. They enable and constrain. They provide continuity over time. They make us what we are. Understanding the link between personal ethos and professional commitment is, in the end, what allows good managers to become great leaders.

In crafting and executing effective strategy, your personal self and your professional self cannot be separated, much less in conflict, there must be a coherent and complete commitment. Without this level of commitment the strength to persist in the long-term strategic struggle will be impossible.

Strategic Balance

Righteousness with justice is the fundamental link at the core of the strategic system put in place by Moses. A few centuries later this strategic vision is reasserted by Amos. A bit later, not so far away, it is reclaimed by Jeremiah. When this linkage is in good shape, the rest of system is very resilient. When one or both of these elements are seriously tarnished or become separated, the rest of the links are not strong enough to produce comparative advantage and the community is vulnerable.

Porter would caution us not to view righteousness or justice as core competencies. They are, rather, the thematic outcomes of a whole host of linkages. Ikea’s activities are organized around the linked themes of variety and affordability. Variety is produced by a web of linked activities. The same is the case for the core themes that Moses set in place.

Righteousness – or tsedaq – is the original and true self of each individual. This is the expression of God that each of us can be. Righteousness is the outcome of self-awareness, self-correction, learning, opportunity, courage, and many more linked activities focused on discovering and being your true self.

Justice – or mishpat – is the character of a community where the righteousness of individuals is nourished and our shared identity is celebrated. Justice is the outcome of caring for the oppressed, correcting the selfish, working and learning together, enjoying the creative contributions of one another, and many more linked activities.

When the web of links between righteousness and justice are then also linked there is a knotted chain of great strength. But these words – especially righteousness – have in our day been exiled to mostly religious contexts. Many of us also live in a time and place where the link between religious life and the rest of life is less than tight. The concepts, however, – using other words – persist. Porter’s writings echo similar themes. Peter Drucker does as well. The psychologist Mihaly Csikszentmihalyi offers the following:

There are two opposite tendencies in evolution: changes that lead toward harmony (i.e., the ability to obtain energy through cooperation, and through the utilization of unused or wasted energy); and those that lead toward entropy (or ways of obtaining energy for one’s purposes through exploiting other organisms, thereby causing conflict and disorder.)…Harmony is usually achieved by evolutionary changes involving an increase in an organism’s complexity, that is, an increase in both differentiation and integration. Differentiation refers to the degree to which a system (i.e., an organ such as the brain, an individual, a family, a corporation, a culture, or humanity as a whole) is composed of parts that differ in structure or function from one another. Integration refers to the extent to which the different parts communicate and enhance one another’s goals.

Replace differentiation with righteousness and integration with justice and you could be reading a highly-educated post-Darwinian Amos. This strategic pairing – righteousness and justice – is a source of comparative advantage that is available to all of us, as individuals, communities, and enterprises. It is the fundamental source of true and sustained comparative advantage.

Unfortunately we too often choose entropy rather than harmony. This can produce measurable short terms gains. But as Csikszentmihalyi joins Moses, Amos, Jeremiah, and others in pointing out, this is the cause of conflict, disorder, and finally death. This is the kind of zero sum competition that Porter warns is the outcome of focusing only on operational effectiveness.

The long-term, sustainable comparative advantage derived from linking all your major activities and your entire value chain to the themes of righteousness and justice is a result of linking your activities to the structure of fundamental reality. To make this point I might choose to quote my favorite quantum physicist, instead I will draw on a 15th Century Spanish rabbi:

Genuine existence engenders the existence of all of creation. The sublime, inner essences secretly constitute a chain linking everything from the highest to the lowest… There is nothing – not even the tiniest thing – that is not fastened to the links of this chain… The entire chain is one. Down to the last link, everything is linked with everything else; so divine essence is below as well as above, in heaven and on earth. There is nothing else.

Inspiration

Don’t add to it or take from it, Moses insists. The strategy is self-sustaining if you will believe and behave consistently with the system. The systems approach to strategy that Moses chose – creating a chain of linked activities – is resilient and largely self-healing. It is a web of links. Imagine a chain that has become knotted and tangled. It is usually possible to cut off several individual links, but the strength of the tangled chain is not weakened.

This kind of strength is possible when a strategy goes beyond operational efficiency and specific core competencies. Rather than engage the market with a few comparative strengths, the enterprise self-consciously links its various activities into a consistent culture of belief and behavior.

As consumers we experience the power of such a culture when we encounter extraordinary service that seems to anticipate our needs and exceed our expectations. To untangle the culture and identify a few key components that differentiate the culture is usually impossible. The power is in how the whole range of activities reinforces one another.

A great restaurant is not just about great food; it is about setting, presentation, personal service, the wine, the temperature, how reservations are handled, how the bill is paid and much more. How each and every one of these activities is linked creates a particular kind of experience. When the linkage is consistent the restaurant achieves its own persona. Billy at the bar, Julie in the kitchen, Andre at the front desk become individual expressions of a shared identity that transcends each of them.

This is a common aspect of those few great restaurants that survive for a generation or more. This persona – consistently and tightly linked activities – attracts appreciation and loyalty in a way no single strength can. Many great chefs have failed because, while fantastic in the kitchen, they were unable to create the right atmosphere in the dining room.

Crafting these linkages and ensuring their consistency is not easy in a family or a small restaurant and is profoundly difficult in larger enterprises. Two approaches to crafting consistency are common: one focuses on regulating individual behavior, the other focuses on inspiring shared belief. Even in the smallest enterprise both are usually present. As the enterprise expands there is a general tendency to emphasize regulation rather than inspiration. But without inspiration, regulations are as likely to spawn inconsistency as consistency.

The linked chain forged in the wilderness survived many disasters. But it was nearly destroyed by a failure of inspiration. Five centuries after the death of Moses many links in the chain had been cut off; whole lengths of the chain that had differentiated the chosen people had been lost. But the differentiation persisted and the community survived – barely.

A long list of leaders over more than 200 years failed to reinforce the linkages. Some of the leaders were, in fact, the principal cause for many of the links being cut. Again and again the leaders found it in their near-term personal interest to focus on specific strengths rather than the strategic system. They tended to emphasize parts rather than the whole. In some cases they attempted to actively divide the community to more easily use the parts for their own purposes.

From time to time there would be revivals. Good leaders would attempt to restore linkages. The rituals and festivals would be renewed. At one point a lost book of Moses (probably Deuteronomy) was found and motivated the restoration of many of the regulations that had been lost. But while the rules and rituals could be reclaimed fairly quickly, the underlying inspiration, including an understanding of the purpose for the rules and regulations, was much more difficult to preserve without consistent reinforcement.

Moses had implemented a strategic system that expected non-compliance. By building into the system the likelihood of failure, the chance for system recovery was enhanced. One of several self-correcting mechanisms was the role of prophecy.

Moses had explained the inspiration behind the rules as “You must not distort justice… Righteousness only righteousness you shall pursue.” Five centuries after the death of Moses a cattle breeder from outside Jerusalem was inspired by these words. Where Moses had linked activities to specifically differentiate his community Amos perceived the linkages were broken or at least very loose.

People were still going to temple, still offering prayers, and were outwardly devout. But outside the temple their behavior seemed to be unconnected with what they said and did inside the temple.

Speaking as a prophet, assuming the identity of God, Amos proclaimed:

I hate, I despise your festivals,
And I take no delight in your solemn assemblies.
Even though you offer me your burnt offerings and grain offerings,
I will not accept them;
And the offerings of well-being of your fatted animals
I will not look upon.
Take away from me the noise of your songs;
I will not listen to the melody of your harps.
But let justice roll down like waters,
And righteousness like an ever-flowing stream. (Amos 5: 21-24)

It was all signaling and no substance. It was like a restaurant where the room looks wonderful, the food smells wonderful, and a harp is playing soothing music, but you feel as if you are being preyed upon by a condescending staff. The difference between the great restaurants that survive and pretentious restaurants that fail is often very subtle. It is often a matter of inspiration.

Great enterprises are communities where each individual is inspired to contribute to achieving the fundamental mission. The rules, the processes, the procedures, and our other rituals exist – and can be overturned – in order to link all of our activities into a coherent, consistent, and authentic wholeness of belief and behavior. Great enterprises do not pretend. They seek, and become, their true selves.

Strategic Integration

We are what we do. Even the smallest enterprise – such as a family – engages in many activities. Each member of the family plays a different role and brings to the activities different strengths and weaknesses. How these roles and activities are fit together, and how this fit amplifies individual strengths and compensates for individual weaknesses, largely determines the effectiveness of the enterprise. By combining activities in a mutually supportive system the family develops a character and outcome much different than four or five people merely sharing the same house.

Porter writes, “Fit locks out imitators by creating a chain that is as strong as its strongest link… One activity’s cost, for example, is lowered because of the way other activities are performed. Similarly, one activity’s value to customers can be enhanced by a company’s other activities. That is the way strategic fit creates comparative advantage and superior profitability.”

Porter uses Ikea, one of my favorite retail organizations, to exemplify the self-conscious cultivation of strategic fit. Ikea has made a choice to define itself as providing a wide variety of home products at affordable prices. While the inventory of each store is both broad and deep, the style is consistently modern, and – well – Swedish. While Ikea has opened stores in many cultures across the globe, it remains true to its origins. It celebrates its outsider status by using obscure Swedish product names (e.g. Enklav and Orgel) and featuring Swedish cuisine in its in-store restaurants. Ikea is very effective in signaling differentiation.

To offer a wide variety Ikea maintains long-term relationships with carefully selected suppliers, invests in huge suburban stores, and ensures that most items are available to take home immediately. To reduce costs Ikea minimizes sales staff, does not provide delivery, and prominently features modular, self-assembled furniture. Ikea is inclined to say yes to most opportunities to increase variety. Ikea is inclined to say no to most opportunities that would increase costs. But even in leading with variety, Ikea is ready to say no to products that are not consistent with its personality – with the true self that gives Ikea such a differentiated position in the home products market. Ikea consciously limits itself to its true self.

Because Ikea consistently focuses on affordability, it has embraced self-assembled furniture. Self-assembled furniture supports further cost containment by eliminating the need for store delivery. Because of the modular nature of self-assembled furniture, greater variety can be inexpensively manufactured and made available. Because there is a greater variety available customers are more confident they will find what they want at Ikea. As a result, customers arrive at Ikea not just looking, but predisposed to buy. When they arrive childcare and the in-house restaurant remove potential distractions to making a purchase decision. The inter-relationships between the activities go on and on. Ikea is consistent, its activities are reinforcing, and this results in an optimized effort across the entire chain of activities.

Each choice and each activity is amplified across the linkages. Instead of a set of separate functions, the enterprise can behave as a strategic system.

Moses offers a framework for living that integrates belief and behavior. The framework focuses on the fundamentals of human life: eating, relationships, and work. Each behavior is linked to the belief that our core identity is found in a relationship with God. The linked behaviors are designed to reinforce the discovery – and recovery – of this identity. Moses assumes that if the linkages are broken or made more complicated the whole community will suffer.

Moses warns, “Everything that I command you shall be careful to do; you shall not add to it or take from it.” (Deuteronomy 12:32) “You must not distort justice… Righteousness only righteousness you shall pursue.” (Deuteronomy 16: 18-20)

The framework has served its purpose for over 3000 years. As Moses anticipated, the linkages were sometimes lost, but in time reclaimed. The framework has provided a sustained strategic advantage. Most of those in competition with the descendents of Jacob have disappeared. The community formed in the Exodus persists. Certainly it has struggled, often it has suffered greatly, but the community has also survived and thrived.

Strategic Choice

To achieve comparative advantage you must choose. Are you slave or free? Which is more important, security or opportunity? Are you seeking a near-term exit or a long-term home? Who are you? Who are you not?

Moses was a very capable leader. He was skilled at creating a meaningful and motivating context through the stories he told and the purposes he advocated. Moses had profound insight regarding the fundamental strengths of individuals and organizations. He cultivated creativity, he empowered, and he loved. Moses refrained from interfering with the free choice of others, but he provided effective frameworks for making good choices. He demonstrated remarkable resilience. Moses was an expert practitioner of six key techniques for producing unique value.

But with all his strengths Moses still had to choose. He could not be all things to all people; he could only be himself – his true self. In leading his people he had to make a fundamental strategic choice, a decision that accurately reflected the reality of his people and their condition.

Strategy is the outcome of analysis. But strategy is not analysis. An effective strategist will consider a whole host of internal and external factors in assessing threat, vulnerability, and strength. A strategist will seek a careful and accurate definition of risk. But finally the strategist must make a choice. The choice can be open to change, but a choice must be made and trade-offs accepted.

In my consulting practice I have often found, especially with larger clients, superb strategic analysis. But the willingness to make a choice based on the analysis is often absent. There is an arrogance, or greed, or – most often – fear that leads many managers to avoid making a real choice.

I once worked with a jurisdiction to assess the threat of terrorism and develop an appropriate prevention strategy. Realistic threats specific to the jurisdiction were outlined. The current capabilities of the jurisdiction were reviewed. Some gaps between the perceived threats and current capabilities were identified and a set of risks defined. The analysis implied some likely priorities, but determining explicit priorities requires a set of choices that – very appropriately – could not be made by the analysts.

Even with superb staff work in-hand leadership resisted making choices. The most consequential risks outlined by staff related to agro-terrorism, an attack on the water system, and biological or radiological WMD. The jurisdiction almost certainly did not have the resources to deal effectively to prevent and mitigate all three threats. But leadership refused to choose and – in essence – left the jurisdiction equally vulnerable to all three threats

Another client was a pioneer in the development of a new product. The product was well-received in the market. The product could, however, be adapted to many purposes and was highly replicable. As the pioneer, the client had the unique opportunity to choose its preferred channels and categories. The founder refused to choose. He wanted to own and defend every niche. This was beyond his capacity. Within three years the company had gone from being the market leader to being an also-ran in every niche.

Michael Porter writes, “Strategy is making trade-offs in competing. The essence of strategy is choosing what not to do. Without trade-offs, there would be no need for choice and thus no need for strategy.” (Porter, Michael; What is Strategy? Harvard Business Review, November-December 1996)

The Books of Moses include a number of “thou shalt not’s.” Saying no – and knowing when and why to say no – may be the most crucial decision made by senior leadership. The decision not to do one thing is often critical to focusing on and actually achieving another.

“General management is more than the stewarding of individual functions,” writes Porter. “It’s core is strategy: defining and communicating the company’s unique position, making trade-offs, and forging fit among activities. The leader must provide the discipline to decide which industry changes and customer needs the company will respond to, while avoiding organizational distractions and maintaining the company’s distinctiveness. Managers at lower levels lack the perspective and the confidence to maintain a strategy. There will be constant pressures to compromise, relax trade-offs, and emulate rivals. One of the leader’s jobs is to teach others in the organization about strategy – and to say no.”

When you choose to say no, you must also be able to articulate why and communicate how the no reinforces the chosen strategy and will advance the goals of the enterprise. This explanation will usually relate to either strategic integration or strategic consistency, or both.

Comparative Advantage

Moses lived during a period of profound and far-reaching change. The entire Eastern Mediterranean was in turmoil. The power of Egypt was in sharp decline. The Hittite Empire, long a source of stability in what is now Turkey, Syria,and Iraq, collapsed. New empires and numerous smaller kingdoms emerged. The Exodus is close in time to the Trojan War. Homer’s heroes may have been one of many aggressive “Sea Peoples” that terrorized the region for a century or more.

These changes created an opportunity that Moses exploited, but the same conditions presented several serious threats. The descendents of Jacob were comparatively few in number, militarily weak, and economically poor. Their survival was uncertain and, even, unlikely.

Moses was in serious need of a source of comparative advantage. His small enterprise was exceedingly vulnerable. To escape Egypt and conquer Canaan Moses and his people needed something that would give them strength greater than their size or wealth. In a world characterized by violent change and aggressive rivalries, the descendents of Jacob needed a source of security and continuity.

Moses promised a place – flowing with milk and honey – but if we consider his behavior it is clear that Moses did not consider the place a sufficient comparative advantage. Otherwise he would have moved to seize the place much sooner than he did. Instead he delayed.

In about the fourth year of the forty-year Exodus Moses sent spies into Canaan in preparation for an invasion. But most of the spies returned reporting, “The people who live in the land are strong, and the towns are fortified and very large…. We are not able to go up against the people for they are stronger than we.” (Numbers 13: 28-31)

Reacting to the spies’ reports most of the people began to talk of replacing Moses and returning to Egypt. Moses ultimately preserved – and even enhanced – his authority. But the episode demonstrated that his people were not ready to claim their potential. They saw themselves as weak and exaggerated the strength of the opposition. Their fears obscured reality and suppressed their potential.

Each of the great-grandsons of Abraham had arrived in Egypt in distress, but free and keenly aware of their unique value. In the generations that followed, however, the unique value had been nearly forgotten and the people fell into the false identity of slavery. The passivity and fear of slavery was, ultimately, too much for Moses to overcome. Almost all those who had been slaves in Egypt would die before a new generation was allowed to complete the Exodus and enter the Promised Land.

With the new generation born during the Exodus Moses worked to restore a sense of unique purpose and potential. To survive in an environment of convulsive change, Moses had to change the mind-set and worldview of his people. Instead of nostalgia regarding the security of slavery (a constant refrain in the book of Exodus) he encouraged an enthusiasm regarding future challenges.

Moses was a realist. He understood his position in the world. He understood the strength of his adversaries. Moses knew the limitations of his people and foresaw the disasters ahead. He anticipated failure, but was confident that recovery was possible.

The strategy that Moses implemented to achieve comparative advantage was focused on recurring recovery more than immediate success. This was a crucial choice. He was focused on long-term survival and continuity. The descendents of Jacob would outlast their adversaries. They would encounter disaster, but would be restored.

When you have had children and children’s children, and become complacent in the land, if you act corruptly by making an idol in the form of anything, thus doing what is evil in the sight of the Lord your God, and provoking him to anger, I call heaven and earth to witness against you today that you will soon utterly perish from the land that you are crossing the Jordan to occupy; you will not live long on it, but will be utterly destroyed. The Lord will scatter you among the peoples; only a few of you will be left among the nations where the Lord will lead you. There you will serve other gods made by human hands, objects of wood and stone, that neither see, nor hear, nor eat, nor smell. From there you will seek the Lord your God, and you will find him if you search after him with all your heart and soul. In your distress, when all these things have happened to you in time to come, you will return to the Lord your God and heed him. Because the Lord your God is a merciful God, he will neither abandon you nor destroy you; he will not forget the covenant with your ancestors that he swore to them. (Deuteronomy 4: 25-31)

Over one hundred generations later the effectiveness of this strategy is evident. It was a courageous and creative strategic choice. It was also very realistic. Most strategies are based on much more short-term and much less realistic thinking.

Most organizations fail within seven years; very few last a generation. An enterprise that has preserved its identity and independence for a century is remarkable. Most of our lives are forgotten and our contributions lost within a few years of our death. In some cases, these outcomes are the result of explicit choice. But more often these are the unintended consequences of failing to make a choice. In the words of Moses they are the outcome of complacency.

The organization – or individual – that makes a choice and then moves to behave consistently with that choice has a significant advantage over the complacent.

Moses as Strategist

We have been trying to make sense of how Moses became an effective prophet of differentiation.

We have seen how Moses developed a strong sense of his true self. This self-understanding gave him the courage, patience, wisdom, and love to enhance self-understanding across his community.

Moses was never entirely successful. There were always aspects of his true self that were not realized. There were always members of the community and characteristics of his community trapped in distraction in delusion. But the sense of differentiation that was achieved gave both Moses and his community significant comparative advantage. This differentiation is fundamental to the extraordinary sustainability of Moses and his community.

In our next and final consideration we will see how differentiation is the outcome of self and community making strategic choices.

Moses faced extraordinary challenges. He demonstrated the ability to achieve comparative advantage by making clear choices from among tough options. Moses made choices that advanced the integration of belief and behavior. He sought to inspire coherence more than regulate conformance. Moses especially attempted to balance righteousness and justice. In execution of strategy Moses worked to reinforce his own true self and the true self of his enterprise. The fundamental link between righteousness and justice is the foundation of any successful and sustainable strategy.

Sustainable Unique Value

A significant challenge for Starbucks is its emerging ubiquity. Can the variety of personal choices inside Starbucks overcome a growing perception that Starbucks is itself the new generic? Is the differentiation strategy implemented by Starbucks sustainable when the rule-breaker has become the rule-maker?

Starbucks will face new challenges. But their initial differentiation strategy has been proven. It was a big risk, but they chose well, and executed effectively. Their strategy has been sustainable.

Many attempts at differentiation fail because the enterprise cannot afford the costs of differentiation. Early in the new century Mitsubishi Motors focused its marketing on drivers in their 20s and early 30s. Product design and advertising signaled and secured a shared value chain with this audience. In 2002 Mitsubishi Motors joined many of its competitors in offering “zero down, zero interest, zero payments for 12 months.”

The pricing tactic was successful in moving product among the demographic market – young and single – that the differentiation strategy had targeted. This market includes the highest credit risks of any demographic segment. An extraordinary percentage of 2002 buyers failed to honor their loan commitments. Two years later Mitsubishi Motors faced a serious threat to its survival directly related to a successful differentiation strategy.

In the enterprises I have led, I have struggled with effective execution of a differentiation strategy. Most customers have communicated that these enterprises lowered buyers’ costs and increased buyers’ performance. But even when prices are – according to long-time clients – 20 to 30 percent below market averages, we have had difficultly persuading prospective clients (and a few current clients) to recognize this value.

In some cases the unique value offered relates to costs and performance that a client considers peripheral to its core value. This suggests we have not effectively linked value chains and have not done a good job signaling unique value. So far we have been unsuccessful in changing the rules. In seeking strategic advantage I am inclined to pursue differentiation, but because of poor execution the customer base has often remained too shallow to ensure sustainability.

According to Michael Porter, “The sustainability of differentiation depends on two things, its continued perceived value to buyers and the lack of imitation by competitors. There is an ever present risk that buyers’ needs or perceptions will change, eliminating the value of a particular form of differentiation. Competitors may also imitate the firm’s strategy or leapfrog the bases of differentiation the firm has chosen.”

Moses was ready to adjust his tactics and techniques to achieve effective strategic execution. But his fundamental strategy was very consistent. He focused his differentiation strategy on what he understood to be the core human need to love and be loved; to value and be valued. Moses chose to organize around a need so fundamental that there was no risk that the buyers’ needs might change.

In preparing his people for his death, Moses admonished, “You must not distort justice (mishpat); you must not show partiality… Righteousness, only righteousness (tsedeq), you shall pursue.” (Deuteronomy 16:18-20) Righteousness and Justice were the two interlocking strategies that Moses was confident would differentiate his people and provide them a key comparative advantage. Later it was written of God, “Righteousness and Justice are the foundation of your throne, steadfast love and faithfulness go before you.” (Psalm 89: 14)

In the Books of Moses righteousness is evidence of God’s will expressed within the individual. This is the fundamental true self. Justice is evidence of God’s will expressed within community. Justice is the outcome of a harmonious web of human relationships where each true self is valued and respected without partiality. Moses almost certainly understood that these goals would never be fully achieved. But he also perceived that the struggle to achieve these goals would have innate, recognized, and sustainable value.

Most enterprises could choose to organize their strategy around the fundamental human need for a community of true selves. But many enterprises actively choose another path. In our personal relationships we often make a similar choice.

One of the first neuroses identified by Sigmund Freud was the “narcissism of small differences.” This is characterized by behavior where the individual seeks to differentiate him or herself from others through superficial means. I often wear bow-ties. In a healthy person or enterprise, such behavior is a signal of a more substantive source of differentiation. I hope my bow-ties signal a thoughtful non-conformity and creativity. The behavior becomes unhealthy when these signals are the only source of differentiation. I have four or five bow-ties. If I had dozens and agonized over which one to wear I would have slipped from signaling to narcissism.

Too many enterprises depend on the cultivation of narcissism. This approach will occasionally result in significant tactical success. It is, however, a strategic dead-end. The narcissist will never be satisfied and a narcissistic customer has no loyalty. In a market where narcissism is the reigning value there is no sustainable unique value or comparative advantage, there is only churn, mutual destruction, and survival of the last one standing.

Some enterprises – for example prominent advertisers in Vanity Fair – may seem to do very well responding to and encouraging narcissism. But there are very few enterprises or individuals in this sector that achieve sustained success. The executive of a leading cosmetics firm was once asked the secret of its unusually long-term success. He is said to have replied, “I always remember we are not selling colors and fragrance, rather we are selling hope!”

Addressing real and healthy human needs – including our abilities to create, empower, love, refrain, frame, and redeem – is a sustainable path to comparative advantage.

Changing the Rules

To lead effectively you must find your true self. To live authentically you must find your true self. To contribute meaningfully of your true self to others you must find a way to differentiate their perception of you. Through differentiation you allow others to perceive the value you have to offer the relationship. In this way your unique value can enrich a whole community.

In the life of Moses and in the work of Michael Porter we find four shared techniques for achieving strategic differentiation: lowering buyers’ costs, raising buyers’ performance, linking values, and using signals and symbols to communicate value.

But these techniques are not always enough.

Many are insensitive to innate value. This is especially the case with those who have not found their own true selves. If they have been unable to choose and cherish their own unique value they are unlikely to recognize your value. This can be a major impediment and source of constant trouble.

In many cases your unique value will remain unrecognized and underutilized unless a way is found to fundamentally alter the context of the relationship. Whether the relationship is personal or commercial there are times when the existing value chains must be broken up and replaced; only then will it be possible to meaningfully link your value chains with those of the market. This often involves transforming how others perceive themselves. This may even involve helping others embrace their true selves.

Michael Porter explains, “The discovery of an entirely new value chain can unlock possibilities for differentiation… Opportunities to achieve dramatic levels of differentiation often result from reconfiguring the value chain.” Porter outlines several ways to “change the rules to create uniqueness.”

Starbucks changed the rules and essentially created a new category. For several generations small privately owned European cafes have sold good coffee, a pleasant place to meet or privately reflect, and even a statement of personal style… for a price. But in America the café became a diner, a truck stop, or a small restaurant where the coffee’s quality was undermined by a tradition of free refills. In the United States the rules were firmly focused on lowering buyers cost. Even in our most cosmopolitan cities most of the coffee served was generic and weak, but cheap. Ordering a cup of coffee and hanging around was limited mostly to bums and brassy college students.

Starbucks took a risk and stepped into this rule-bound context with something very different. Instead of a choice between regular and de-caf, the buyer is given a mind-boggling range of choices. Instead of large cans of a single generic, Starbucks offers fresh-ground exotics. Instead of Formica and fluorescent, Starbucks offers soft lights, living room sitting and, most recently, WiFi connections. Instead of turning tables, Starbucks aims at repeat sales. Today the risk seems like an inspired yet obvious choice. Given the rules originally in place, the eventual success of Starbucks was anything but obvious.

It helped that a similar model could be seen working in Europe. Starbucks started small and stayed small for a number of years. In this process Starbucks found its true self and remains a strongly value-based enterprise. These values have largely persisted (or been consciously reclaimed), even under the pressure of rapid and significant growth.

Equally important was helping buyers recognize and express their true selves. Starbucks tapped into a fundamental need for human socialization and personally chosen quality in an increasingly generic world. At Starbucks buyers are given a helpful framework within which they are empowered to be creative in making their own choices. Starbucks changed the rules, helped its buyers recognize and claim what they valued, and in the process the enterprise came to be highly valued.

Moses changed the rules: regarding what it meant to be a descendent of Abraham, regarding what it meant to be a human being, and regarding the nature of God. In changing the rules – and in creating a framework of innate value – Moses implemented his differentiation strategy.

Symbols and Signals

In pursuing differentiation a firm must not only lower buyers’ cost and/or increase buyers’ performance. It must also ensure that the value produced by the firm is linked to value that the buyer recognizes. Without this recognition, the value does not have impact.

Porter explains, “Buyers… frequently do not fully understand all the ways in which a supplier actually or potentially might lower their costs or improve performance – that is, buyers often do not know what they should be looking for in a supplier… The buyer’s perception of a firm and its product, therefore, can be as important as the reality of what the firm offers in determining the effective level of differentiation achieved… Buyers will not pay for value that they do not perceive, no matter how real it may be… A firm that delivers only modest value but signals it more effectively may actually command a higher price than a firm that delivers higher value but signals it poorly.” (Porter, Michael E.; Competitive Advantage, Free Press, 1985)

Signaling is especially important when dealing with intangible value, future value, or value that is difficult to measure. In education learner satisfaction and learning efficacy do not always travel together. When new concepts or processes are introduced there can often be an inverse correlation between satisfaction and efficacy. Early in a successful educational program the buyer will often perceive failure, unless an effective means is discovered of signaling the future value being delivered.

There is a similar challenge in adoption of many technology products. Well-designed technology lowers buyers’ costs or increases buyers’ performance by changing buyers’ behavior. But there is a cost – often a high social cost – in achieving the initial change in behavior that will produce the value. In many cases the technology “fails” because it is never truly adopted. It is not adopted because the initial cost of changing behavior is underestimated – or purposefully obscured – and becomes a major impediment to adoption.

In the late 1970s I was responsible for introducing an early word-processing system into a mid-sized professional firm. The principal benefit of the system was to allow the professionals who authored documents to also personally finalize edits and be responsible for the final product. This increased the speed of producing documents and, usually, improved the accuracy of final documents. The professionals – all of whom were proficient typists – generally welcomed the new technology.

The secretaries were much more skeptical. There was a nearly one-to-one-ratio of professionals to secretaries. A core value produced by the secretaries was the time consuming process of retyping various drafts on their state-of-the-art IBM Selectrics. The word processing system was seen as a threat to their employment future. Given their prominence in the office and their long-time relationship with key professionals, the secretaries could have significantly complicated adoption of the word-processing system.

About six months before the technology was installed we began a process of retraining the secretaries as “account associates.” In this new role the secretaries were focused on research, some client service, and document management. We invested in the creation of an in-office research library and crafted business relationships with public and university libraries (well before the Internet, much less Google). In a variety of ways we signaled and symbolized that the secretaries, until then part of a self-contained and quickly capped career-track, were to be integrated into the professional career-track, would be assured of good jobs, and would be expected to contribute in significant ways to the firm’s productivity.

Less than two years later traditional secretarial duties, measured in time expended, had been reduced by approximately two-thirds, revenues had nearly doubled, and most of the secretarial staff had been transitioned into much more value-producing (and usually more satisfying) roles. The word processing system contributed to this outcome. Without the technology, the transition would not have been possible. But the technology was the easy part. The hard part was designing and executing the human transition that would accompany the technology.

The new technology was the explicit value – and threat – perceived. The new behavior was the implicit value – and most important value – offered. To convert the secretaries from skeptics to buyers, we had to credibly signal future value. We could not deliver future value immediately. Until the new technology was fully adopted, creation of future value was not possible. Our credible signals and symbols of future value built a bridge to the future and the reality of increased value.

In my experience many business people – and especially business men – are incompetent in the use of signals and symbols. They either avoid symbols as “too soft” or “unreal” or they use signals that are not linked to substantive issues of cost or performance. As a result they come off as cold and uncaring or superficial and hypocritical.

Porter argues that signals must be tightly related to the cost and performance criteria that matter most to the buyers. “Signaling criteria can be identified by understanding the process the buyer uses to form judgments about a firm’s potential ability to meet use criteria, as well as how well it is actually meeting them. Examining each use criteria is a good place to start… Like use criteria, signaling criteria should be defined as precisely and operationally as possible in order to guide differentiation strategy.”

Prior to the encounter at Mt. Sinai God is characterized primarily by direct action. Following Mt. Sinai the nature of God is increasingly communicated through symbols and signals. Much of the last half of Exodus is taken up with instruction regarding the application of symbols and signals.

Late in his life Moses assured his people of future value by reminding them of past signs and symbols that had been fulfilled:
He will love you and bless you and multiply you; He will also bless the fruit of your womb and the fruit of your ground, your grain and your new wine and your oil, the increase of your herd and the young of your flock, in the land which He swore to your forefathers to give you… You shall be blessed above all peoples… You shall well remember what the Lord your God did to Pharaoh and to all Egypt: the great trials which your eyes saw and the signs and symbols and the mighty hand and the outstretched arm by which the Lord your God brought you out. (Deuteronomy 7:13-19)

In the Books of Moses the Hebrew מופת or mowpheth is translated as symbol. It is also often translated as wonder or miracle. The word for sign can also mean omen or remembrance, warning or proof. A thoughtful and substantive use of signs and symbols is crucial to the creation of recognized and differentiated value. Well-chosen and carefully used signs and symbols can do miraculous work.

Linking Values

Moses has a product he desperately wants his people to choose and cherish. The product has innate value and offers substantial benefits. Despite the quality of the product, the market is reluctant, skeptical, and inclined to choose low quality substitutes.

Moses works hard to demonstrate how his product can reduce the buyers’ costs and increase the buyers’ performance. In this process he is making links between the values and activities of God with the values and activities of the chosen people. He is trying to demonstrate that “I am Who I am” is uniquely powerful, uniquely loving, uniquely just. Moses is seeking to persuade his people that the God of their ancestors is not just one of many possible gods, but is absolutely differentiated from all other gods, is the one true God of the universe, and is their unique source of meaning and purpose.

Moses can observe that assurance of meaning and purpose is valued by his people. In what they say and do, they want and need what God is offering. But, still, it is challenging to link the values – even when what is valued is fundamentally shared.

Porter writes, “The starting point for understanding what is valuable to the buyer is the buyer’s value chain. Buyers have value chains consisting of activities they perform just as a firm does… The buyer’s value chain determines the way in which a firm’s product is actually used as well as the firm’s other effects on the buyer’s activities. These determine the buyer’s needs and are the underpinnings of buyer value and differentiation.” (Porter, Michael E.; Competitive Advantage, Free Press, 1985)

My firm’s principal value-delivered – reflecting its true self – is learning efficacy. But many of our clients have only a passing interest in evidence of real learning. In most markets “education” is seen as a viable product whether or not the delivery results in learning. The quicker, cheaper, and easier education can be delivered, regardless of actual impact, the happier many of our clients will be. But this low expectation regarding learning translates into a tendency to low-ball budgets. The disconnect between what we value and what many clients value is clearly disadvantageous to the firm.

Almost all of our clients, however, place high value on increasing their budgets. This is often the preeminent activity in their value chain. Recognizing this buyer value, we have also observed that many of our clients depend on PowerPoint presentations to argue for their budgets. As a result, we have increasingly used PowerPoint presentations to report on learning efficacy. We produce these PowerPoints with the buyers’ funders in mind. This tends to encourage our buyers to use learning efficacy – and the same PowerPoints – as an argument to justify increased funding, which, if successful, tends to encourage our buyers to give greater value to our firm’s core value in learning efficacy.

We place high value on learning efficacy. Many of our clients place high value on generating higher budgets. By making it easy for our clients to see and use a relationship between what we value and what they value, we create a greater sense of shared value, and better position our product as having unique value.

This one linkage is not enough to create a sustained strategic advantage. We must make similar links with a wide variety of buyer activities. As Porter explains,“Differentiation… stems from the specific activities the firm performs and how they affect the buyer. Differentiation grows out of the firm’s value chain. Virtually any value activity is a potential source of uniqueness.” The more links in the value chain that the supplier and buyer clearly share, the stronger the supplier’s strategic advantage.

What do you do? How you actually behave is the best evidence of what you value. How are your various activities linked? Are they linked? How do the links impact your results? Try to map out your value chain – the sequence of behavior – that results in your “product.”

What does your client do? How are your client’s activities linked? Try to map out your client’s value chain. Where can you forge a connection between links in your value chain and links in your client’s value chain?

After the debacle at Mt. Sinai – with the chosen people fleeing from their loving creator – Moses and God substantially adjust their approach. In place of thunder, lighting, trumpets, smoke, and devouring fire – a veritable volcano of a God – Moses receives instructions to craft an exquisite tabernacle of fine wood, precious stones, and rare metals in which God will dwell among the people in a tent.(Exodus 25) Talk about strategic repositioning.

From this Ark of the Covenant, made of acacia wood, God will travel with the chosen people, and meet with Moses “face to face, as one who speaks to a friend,” (Exodus 33: 11) and in this less dramatic way build a relationship with the whole community. The buyers no longer have direct access, but through Moses there is significant indirect access. The power available is still the same, but the packaging is much less intimidating. The God of the tabernacle is just as responsive to the profound needs of the people as the God of the fiery mountain, but the subtle mystery of the tabernacle is, evidently, more acceptable than the full power of the volcano.

Throughout the Bible we can perceive God working to link our value chain to the source of ultimate value. It remains the buyer’s choice. But God is trying to make it easy for the buyer.

Raising Buyer Performance

For the last decade I have focused most of my professional life on Network Based Learning, where web-based technologies are used to facilitate problem-solving. The technologies available for this purpose are enticing. There is an ongoing temptation to enhance the performance of web-based learning products far beyond what the buyer values.

Several potential competitors have disappeared as they have invested heavily in gee-whiz technology that has clearly increased the potential performance of their product, but in ways that have little or no impact on the buyers’ performance. Just as we tend to focus on our own internal costs, there is a tendency to focus on our own performance. Porter pushes us, instead, to seek strategic advantage by focusing on our buyers’ performance.

Raising buyer performance will depend on understanding what is desirable performance from the buyer’s viewpoint… For industrial, commercial and institutional buyers… the needs of the buyer’s buyer must be understood, requiring the same analysis as the analysis of buyer value… Raising performance of industrial, commercial, or institutional buyers can also be based on helping them meet their noneconomic goals such as status, image, or prestige… For products sold to consumers, raising performance will be a function of better satisfying needs.

From its earliest days Intel has tended to define performance in terms of speed and power. But in recent years the company has begun to make what insiders call a sharp “right hand turn.”

In 2004 Intel focused on a new chip whose principal feature is to extend the range of wireless connections. According to the New York Times Paul S. Otellini, President and COO realized, and persuaded the company, that “producing a chip that could process data at, say, 3.6 megahertz rather than 3.4, was not nearly as important as making chips with built-in WiFi, thereby saving consumers from having to add hardware to the PC’s…Through most of Intel’s history, every new product followed a simple pattern: the engineers figured out what was possible and then told the marketing department what to sell. The company understood the importance of consumer focus groups, and employed ethnographers to study how people use computers, but their influence was minimal before Mr. Otellini took charge of the chip-making division. ‘We turned the process on its head,’ he said.”

Intel is beginning to redefine performance as a marketing issue rather than an engineering issue. Performance is being defined by buyers and in the process Intel is extending its strategic advantage.

Seven weeks after leaving Egypt the descendents of Jacob arrive at Mt. Sinai. Moses works to prepare the whole people to be meet God. We read:

On the morning of the third day there was thunder and lightning, as well as a thick cloud on the mountain, and a blast of a trumpet so loud that all the people who were in the camp trembled. Moses brought the people out of camp to meet God. They took their stand at the foot of the mountain. Now Mount Sinai was wrapped in smoke, because the Lord had descended upon it in fire; he smoke went up like the smoke a of a kiln, while the whole mountain shook violently. As the blast of the trumpet grew louder and louder, Moses would speak and God would answer him in thunder. When the Lord summoned Moses to the top of the mountain, and Moses went up. Then the Lord said to Moses, “Go down and warn the people not to break through to the Lord to look; otherwise many of them will perish.” (Exodus 19:16-21)

The Lord need not have worried. According to tradition by the time the second commandment was announced the people were pleading to leave and asking Moses to serve as their intermediary. “When all the people witnessed the thunder and lightning, the sound of the trumpet and the mountain smoking, they were afraid and trembled and stood at a distance, and said to Moses, ‘You speak to us, and we will listen; but do not let God speak to us, or we will die.” (Exodus 20: 18-19)

The target market was given the chance for direct access to full value and enormous power. Clearly God and Moses anticipated the market would benefit from and appreciate the high performance opportunity. But no, the market was intimidated. The market did not know what to do with the full power made available to it. The market preferred to have the power filtered through a kind of middleware. God and Moses adapted their product to reflect the kind of performance the buyers valued and were prepared to engage.

The old saying, “the buyer is always right,” is misleading. Buyers are often lazy, self-indulgent, reluctant to change, and unable to recognize high quality even when it is delivered to them on a silver platter. Designers, engineers, and other professionals who have committed their lives to a product-line are often right about what has innate value and the buyer is often wrong. But it is not an issue of right and wrong. It is an issue of readiness, acceptance, and willingness to buy.

Even Moses – even God – adapted his offering to the kind of performance that the buyer was ready to value.

Lowering Buyers Costs

Tactical and short-term advantage can be achieved by lowering production cost through greater operational effectiveness. In a competitive environment, all firms are encouraged to maximize operational effectiveness. As a result, operational effectiveness is a necessary but insufficient condition for achieving strategic and long-term advantage.

It is, however, also possible to lower costs in ways that transcend operational effectiveness. Such methods can significantly differentiate the enterprise. If this differentiation is sustainable, it will produce a strategic advantage.

In business – and perhaps in much of life – we usually define cost as the value we must give up in order to generate a product or service. This cost informs our pricing. But Porter encourages us to also consider the cost customers experience that goes beyond our price. What is the customer’s cost to access and use your product or service? If you can reduce the overall cost to the customer, you should be able to achieve a strategic advantage.

Hertz has lowered my cost of accessing their services. Through their Hertz Gold program I save a great deal of time and time is a cost to which I am very sensitive. Unfortunately for Hertz this service is highly replicable. Most other rental agencies have an identical service. Hertz has been attentive to my indirect costs of accessing their service, but their response is not differentiated, and does not create a strategic advantage.

My wife purchased her car – that she loves – from a dealership that seems unable to conveniently schedule regular service. She has observed that the dealership from which we purchased my car is friendly, flexible, and accessible. I always deal with the same service manager. I am regularly advised of upcoming service needs and costs. The service-oriented dealership has created for itself a significant strategic advantage in terms of our next car purchase. We will pay a premium price to enjoy a lower overall cost, where cost is determined by price, hassle-factor, and time expended. The buyers’ cost is more than your price.

My wife and I do most of our banking with the nation’s largest financial institution: Bank of America. But really we bank with Doris. Our bank has changed hands several times. Doris has provided continuity and personalized service. When the huge institutional system breaks-down – as it often does – we call Doris to fix it. If Doris would move, we would try to move our banking with her, despite all of the direct costs of doing so, because working with Doris saves us so many indirect costs. I worry about what will happen when Doris retires. But as long as Bank of America has Doris – or can develop new generations of Doris-like professionals – they have a significant strategic advantage in capturing our business.

Michael Porter explains, “In seeking opportunities to lower buyer costs, a firm must chart in detail how its product moves through or affects the buyer’s value chain, including the buyer’s inventory, handling, technology development, and administrative activities. It must also be familiar with all other products or inputs its product is used with, and understand how its product interfaces with them. The firm must also identify every other value activity in its value chain that affects the buyer’s chain.” (Porter, Michael E.; Competitive Advantage, Free Press, 1985)

Throughout the Exodus story Moses – or God working through Moses – is constantly providing products and services for which the “customers” do not directly return value. Manna from heaven, water from a rock, and military victory can be seen as loss-leading investments to create and preserve a market. In part this demonstrates a problem in making an analogy between the product that God offers and that offered in a commercial setting. God’s bottom-line has a different definition of profit and loss than our own.

But God is certainly promoting a product – a way of living – and Moses is a kind of Chief Operating Officer, product manager, and salesman rolled into one. Again and again, Moses positions the product as responding to real needs, improves access to the product, and even suggests variety in some aspects of the product that customers otherwise would not recognize. Given the promised – and demonstrated – benefits, Moses keeps the buyers costs very low.

Despite the innate value of the product – and the skill of Moses in positioning the product – it is still misunderstood and undervalued by many customers. The product is simply rejected by a significant proportion of the market. Fantastic service is quickly taken for granted. The experience of Moses is worth remembering the next time you grow frustrated in opening a new market.

On more than one occasion God is ready to give up on the chosen target market and start-over from scratch (Exodus 32: 9-14), but Moses successfully argues it is still possible to achieve the goals set out at Mt. Horeb. From time to time God does, in fact, eliminate a portion of the market that has proven itself absolutely insensitive to the value being offered. (Exodus 32: 35) But, all-in-all, the story of Exodus can be seen as a very successful effort to cultivate a long-term supplier-customer relationship. The shared value chains now extend over 3000 years.

Identifying what Others Value

Michael Porter’s theory of differentiation requires close attention to what he calls the value chain or value activities.

Ultimately, all differences between companies in cost or price derive from the hundreds of activities requires to create, produce, sell, and deliver their products or services, such as calling on customers, assembling final products, and training employees. Cost is generated by performing activities, and cost advantage arises from performing particular activities more efficiently than competitors. Similarly, differentiation arises from both the choice of activities and how they are performed. Activities, then, are the basic units of comparative advantage. Overall advantage or disadvantage results from all a company’s activities, not only few. (Porter Michael, What is Strategy? Harvard Business Review, November-December 1996)

We are what we choose to do.

Reducing cost through increased efficiency is a defensive game. It may be a very effective game in the short-term, but it does not produce a sustainable long-term advantage. Operational efficiency and effectiveness – the foundation of cost competition – is replicable by many competitors. While some competitors will fail to meet industry benchmarks, others will succeed and eliminate your cost advantage.

Operational effectiveness is necessary, but alone it will not create strategic advantage. Porter writes, “Competition based on operational effectiveness alone is mutually destructive, leading to wars of attrition that can be arrested only by limiting competition… Continuous improvement has been etched on managers’ brains. But its tools unwittingly draw companies toward imitation and homogeneity. Gradually, managers have let operational effectiveness supplant strategy. The result is zero-sum competition, static or declining prices, and pressures on costs that compromise companies’ ability to invest in the business for the long term.”

To achieve a sustainable strategic advantage there is a need to decrease cost or increase value delivered in a manner that goes beyond efficiency and clearly differentiates one enterprise from another. Porter makes the point that this kind of strategic differentiation is helpful to customers, helpful to the differentiated enterprise, and can result in a much more stable structure for the entire community of competitors.

But simply being different is not good enough. Eccentricity is not a strategy. To effectively involve others in pursuing goals and engaging troubles – yours or their own – it is necessary to be different in a way that is recognized as valuable.

Porter argues that “strategic positions can be based on customers’ needs, customers’ accessibility, or the variety of a company’s products or services.” In each case, choosing a sustainable strategy requires understanding what the customer values. Not every form of greater access is valued. More and more variety can actually confuse and frustrate. Even authentic responses to real needs can sometimes be discounted.

A high percentage of people with chronic disease fail to observe simple protocols for drug use that will improve their lives and even save their lives. These customers do not value what they need. Most of these people are more likely to consume what they need if the protocols are reinforced by personal communications with health-providers, volunteers, family members or others. Participation in user groups will also encourage most people to engage their troubles more effectively. The social interaction is highly valued, even while the life-saving product is undervalued.

You can discover what others value by observing what they choose to do.

Early in my career a client, specifically a Senior Vice President for Marketing, hired the firm I was with to assess how the enterprise could increase market penetration. The client was closely owned but managed by professionals. The Chairman of the Board was one of the owners and represented the owners’ interests. During the analysis and consultation I met twice with this man. The Chairman’s interaction with me was polite, vague, and rather banal. I wrote him off as a largely uninvolved watchdog who would support any decision that would increase profits.

My final presentation to the executive team was straightforward. Both product studies and market studies pointed to the same set of choices. Greater market penetration was possible, the risks were low, the necessary investments affordable, and the likelihood of sustaining the increased market position was strong. Well before I was two-thirds through the presentation, it was clear the findings were in serious trouble. The Chairman’s questions and comments were skeptical, grumpy, and increasingly angry. He did not value greater market penetration. Rather, he feared it. The fact that our study had found it was possible was a negative.

Shortly after the presentation the Senior Vice President “resigned.” My firm was not retained for further work. The enterprise continued to pursue its traditional market. A quarter century later it continues to be a small player in what appears to be a sustainable market.

I had failed to accurately define my client. I had failed to even ask what my real client valued. I had offered a solution to a problem that the client did not recognize. Precisely because my “answers” were straightforward – even obvious – I should have asked myself why the client had not already embraced at least some of the answers. Why is the client behaving as it is? What should that behavior tell me about what the client values? How can I frame my choices to fit the choices my client is already making?

Today I perceive that the Chairman had a very clear sense of his true self and what he valued in the true self of his enterprise. He was not especially articulate or forthcoming, but neither did I probe very effectively. The assignment I was given could have contributed to the true self that the Chairman had in mind. It did not because I was insensitive to my client’s definition of value.

Moses was a much wiser man. When Moses was given his assignment on Mt. Horeb we certainly would empathize if he had simply said, “yes sir” and scurried away to make sense of the assignment without the intimidating thornbush flaming away. Instead, he anticipated the troubles ahead and pushed God to help him deal with the reality he perceived.

God promises Moses, “I will be with you.” (Exodus 3:12)… “But Moses said to God, ‘If I come to the Israelites and say to them, “The God of your ancestors has sent me to you,” and they ask me “What is his name?” What shall I say to them?” (Exodus 3: 13) Moses is trying to better understand the motivation behind this assignment. What is the identity of – the nature of God – and what does this identity suggest about the origins and intent of the assignment? What does the boss value? God answers. Moses listens and seems ready to accept the intention he perceives. Then Moses shifts his attention to how this assignment may be received by his “clients.” Moses speculates to God, “But suppose they do not believe me or listen to me, but say, “The Lord did not appear to you.” (Exodus 4:1) Moses needs sources of authority and legitimacy. He pushes for it. God gives Moses tools that will help him communicate the credibility and value of what is offered to the Israelites.

Finally Moses turns to his own skills and capacity. He reminds God that he is not an eloquent speaker. At this point God is getting impatient with the push-backs and commands, “Now go, and I will be with your mouth and teach you what you are to speak.” But Moses knows himself too well to accept this brush-off. We read Moses saying, “’O my Lord, please send someone else.’ Then the anger of the Lord was kindled against Moses.” How many of us know ourselves so well that we would argue in this way with our secular boss, not to speak of God? But in the Exodus story God relents and assigns Aaron as spokesperson and deputy to Moses.

Moses gave careful attention to each aspect of the value equation: internal value, external value, and personal value. Unless the value we deliver is responsive to the value that others expect and respect, it is not – in fact – valuable. Unless the value is consistent with our true self, we will be unable to deliver the value.

Applying Value

In the last forty years of his life Moses found his true self. Each choice he made that was consistent with this true self brought greater strength, both to himself and his community. Moses was not free of doubt, he argued with God, he made mistakes, and sometimes he chose badly. But with each good choice he created greater possibilities.

In the process Moses became a great leader. He overcame powerful adversaries. He kept his people focused on long-term objectives. He introduced an effective strategic framework that continues to be used by individuals and enterprises centuries later. He created the future. Moses chose God’s will, and God blessed Moses.

But this did not guarantee success or result in an easy life. Moses faced all the typical challenges – and more – of any leader. There were several external threats. But it was internal dissatisfaction and dissension that preoccupied Moses. Even late in his life Moses continued to be troubled by his “stiff-necked,” “foolish and senseless,” “perverse and crooked” people. Moses tended not to focus on the external threats ahead but, rather, on the persistent internal threats that could undermine how the external threats would be engaged.

Some religious traditions teach the transcendence of trouble. They hold out the promise of an earthly paradise. This is not the story of Moses. The books of Moses are full of trouble. The life of Moses is an example of how one engages – not escapes – from trouble. Becoming his true self was the foundation for dealing with trouble, but was not sufficient. Moses had to develop and deploy sources of comparative advantage in dealing with both internal and external threats.

Knowing and being his true self – creating, empowering, loving, refraining, framing, and redeeming – gave Moses real power and significant potential. But how these strengths are used to engage trouble is where potential becomes reality. The most poignant failures – personal or commercial – are often the result of great strengths that are not applied, and sometimes not even recognized.

Innate value is not always recognized value. In the 1950s U.S. private railways might have recognized their great strength as trusted purveyors of personal transportation and begun to offer air travel as well as rail travel. They might have integrated air and rail travel for an even more convenient and cost-effective system than we have today. But the rail companies did not use this strength and were eliminated from the long-distance travel sector. With its origins in catalogue sales, Sears might have been an early adopter of e-commerce. Instead this is yet another commercial channel Sears has largely yielded to Walmart and others. How many times have you met individuals with impressive talents that are astoundingly underutilized? Examples of lost potential are pervasive.

Becoming your true self is innately valuable. A community or enterprise that crafts a true self has enormous potential. But to fulfill this potential the true self must be applied to solving problems, engaging troubles, and making the future.

Moses applied his true self through a variety of techniques. Many of these techniques reflect key components of differentiation identified by Michael Porter, a professor at the Harvard Business School. The behavior of Moses and Porter’s theory especially overlap in the following seven areas:

• Identifying what others value;
• Lowering buyers cost;
• Raising buyers performance;
• Linking your value with what others value;
• Using symbols and signals to give tangible meaning to intangible value;
• Changing the rules; and
• Ensuring sustainable unique value.

If you feel unappreciated by your spouse, if you are undervalued by your clients, if your customers do not see a difference between you and your competitors, it may be the result of not living consistently with your true self. It may be that you are undermining your core value with bad choices.

But we see in the life of Moses a profoundly true self who was still the target of complaints, abuse, and rejection. Moses responded with what Michael Porter calls a “differentiation strategy.” An effective differentiation strategy will result in recognition that you, or your enterprise, are unique at something that is valuable to the audience that matters to you: spouse, clients, children, customers, neighbors, voters, or whoever.

An effective differentiation strategy will not eliminate all troubles. But it will provide a means for engaging those troubles in a way that reinforces your true self and moves you – and potentially your community – forward in an Exodus-like journey to your ultimate goals.

As Moses demonstrates, this unique value must be consistent with your true self. This strategy is absolutely not about being all things to all people. But it does mean expressing your true self in ways that are sensitive to the needs, wants, and current conditions of others. It is a way of applying the profound potential of your true self in reaching out to, helping, serving, and leading others.

Moses Creates and Communicates Differentiated Value

Since February 1 we have considered how Moses recognized the spiritual and practical potential of differentiation. We have seen how a leader can use a group's stories, origins, failure, purpose, promise, and transcedent potential to create a readiness for and recognition of differentiation.

Next we reviewed six habits of differentiation: creating, empowering, loving, refraining, framing, and redeeming. Consistently practiced, these habits produce a powerfully differentiated identity.

Once we have found our true-self - a uniqely differentiated individual - we can seek fulfillment in relationship with others by consistently applying seven techniques:

1. Identifying what others value,
2. Lowering the cost of others,
3. Raising the performance of others,
4. Linking your value with what others value,
5. Using signals and symbols to clarify your value,
6. Changing the rules regarding what is valued, and
7. Ensuring sustainable unique value.

I Am Who I Am

In the Books of Moses the framework for fulfillment – the means for individuals and organizations to claim their true self – includes six fundamental characteristics: creating, empowering, loving, refraining, framing, and redeeming. These are among the principal characteristics of God. Because we are created in God’s image and likeness they are among our principal characteristics. Our true self – as individuals or a community – will be bound up in living coherently with these characteristics.

We could be even more reductionist. We are meant to be creators. An early commentary on the Torah taught:

Everything that God,
The source and substance of all,
Creates in this world flows naturally from the essence of God’s divine nature.

Creation is not a choice but a necessity.
It is God’s nature to unfold time and space.

Creation is the extension of God.
Creation is God encountered in time and space.
Creation is the infinite in the garb of the finite.

To attend to creation is to attend to God.
To attend to the moment is to attend to eternity.
To attend to the part is to attend to the whole.
To attend to Reality is to live constructively. (Pirke Avot, Chapters of the Fathers, 6:2)

What we create we are inclined to value. Because it is our creation we delight in it and may value it as much as we value ourselves, which is Rollo May’s definition of love. In love we empower, in love we refrain from interfering with the others freedom to choose, in love we create and apply frameworks to inform our choices (and the choices of our beloved), and through these choices we are able to find fulfillment, and even to reclaim our identity from bad choices.

During his encounter with the burning bush, Moses asked to be told the name – really the identity – of God. Moses was told “I am Who I am” (Exodus 3:14) or, in some translations, “I will Be what I will Be.” Rabbi Joseph Telushkin offers that the phrase can also mean “I shall be as I shall Act.”(Talushkin, Joseph; Biblical Literacy)

The tense of God’s name – present or future – has been argued over with a depth of emotion and division that religious controversies seem especially to spawn. Given the all-encompassing nature of God, I advocate giving equal attention to both present and future. The ancient Hebrew texts capture this in the name given to God by the early writers: YHVH. Rabbi David Aaron explains that this is “an amalgam of the verb ‘to be’ in the past, present and future – was/is/and/will be.”

Peter Drucker argues that the fundamental role of management is to create the future. This is done through strategic planning, what Drucker calls the “entrepreneurial skill.” Further Drucker gives particular emphasis to the creative tension between the present and the future. He writes, “The future will not just happen if one wishes hard enough. It requires decision – now. It imposes risk – now. It requires action – now. It demands allocation of resources, and above all, of human resources – now. It requires work – now… There are plans that lead to action today – and they are true plans, true strategic decisions. And there are plans that talk about action tomorrow – they are dreams, if not pretexts for non-thinking, nonplanning, and nondoing. The essence of planning is to make present decisions with knowledge of their futurity.” (Drucker, Peter; Management: Tasks, Responsibilities, Practices). We create the future by making choices now.

We are each in a process of becoming. It is always so. Each new moment presents new opportunities, new threats, and new choices. We choose – even if we choose by avoiding decision – and the consequences of our choice contribute to a new creation.

In leading and managing an enterprise we face the same reality. Drucker writes, “We must make the present create the future.” This is the fundamental task of the enterprise. This task will preoccupy the leaders of the enterprise and defines the most important contribution that can be made to the enterprise by any of its stakeholders. The creation of a sustainable future requires that we make choices coherent with our true selves: creating, empowering, loving, refraining, framing, and redeeming.

Redeeming

But as the Books of Moses so clearly demonstrate, even the most inspired leader with the best frameworks will face lack of understanding, non-cooperation, and even outright rebellion. Individuals lose their way. Organizations choose the wrong path. Persistent pursuit of purpose is not always the quickest way to the Promised Land. Even good choices can result in failure.

Yet it is possible to move on. It is possible to recover. Devastating loss and enormous pain can be overcome. At the beginning of what would be a forty year trek through the wilderness, Moses sang a hymn with these words, “In your steadfast love you led the people who you redeemed; you guided them by your strength to your holy abode.” (Exodus 15: 13) Moses perceived that God was reclaiming the descendents of Abraham, Isaac, and Jacob. They had sold their inheritance to the Egyptians in exchange for temporary security. God came to reclaim ownership and to allow the nation of Israel to reclaim its true self.

The ability to recover from failure is an essential element of personal and professional effectiveness. In business circles, rather than redemption (too religious?) or recovery (too much emphasis on failure?), the favored term is resilience.

Diane Coutu, a senior editor at Harvard Business Review, writes that among individuals and organizations that survive failure and go on to thrive, there is “a cool, almost pessimistic sense of reality.” She goes onto explain, “Perhaps you are asking yourself, ‘Do I truly understand – and accept – the reality of my situation? Does my organization?’ Those are good questions, particularly because research suggests most people slip into denial as a coping mechanism. Facing reality, really facing it, is grueling work.” (Coutou, Diane L.; How Resilience Works, Harvard Business Review, May 2002

In addition to a fundamental realism, Coutou found two other common characteristics of resilient organizations and individuals: the ability to make meaning and the ability to make do. She writes, “The most successful organizations and people possess strong value systems. Strong values infuse an environment with meaning because they offer ways to interpret and shape events.”

My undergraduate college is a bit more than 150 years old. At least once in every generation it has faced down being closed. The principal tools of survival have been a sense of unique mission and meaning. Many stakeholders in the college have seen it as a crucial source of meaning in their own lives. If the college closed a whole web of meaning and memory would close with it. As a result, in times of crisis the college has survived by redeeming tokens of value it transferred to its alumni and others over the years. The college is never more attentive to its heritage and inherited culture than when it is in most trouble. At this point, the noble and courageous ability to recover may be, if anything, too much a part of the institution’s self-definition. It would be better for the college to recognize reality sooner and thereby reduce its dependence on redeeming value.

Resilient people and organizations make do, they are inventive, and they are creative. They grapple with reality by creating something new in response to the threat. In its most recent struggle to survive my alma mater reconceived its entire approach to tuition and financial aid. It communicated its policy changes in terms of a differentiated value that went well beyond price. It created meaning. As a result, it substantially and effectively differentiated itself in the market. This creative response generated strongly positive media and helped recruit one of the largest freshmen classes in the institution’s history.

We can survive failure and go on to thrive by being realistic, making meaning of our failure, and being creative. We may lose our way, but we always retain the ability to redeem our true self.